SA Wants to Hand Operation of Rail, Ports to Business

16 Oct 2023 CW Team

The blueprint, as detailed in a 124-page document titled ""Roadmap for the Freight Logistics System in South Africa,"" recently revealed and viewed by Bloomberg, outlines a series of timelines and measures. These measures encompass the establishment of an autonomous port and rail regulator, granting private firms access to rail lines, and offering rights to operate ports and rail routes to private entities. Interestingly, even the operation of critical coal and iron-ore rail export lines, which have been underperforming and impacting exports for companies such as Anglo American Plc and Glencore Plc, may potentially be entrusted to private operators, as per the report's authors. This suggestion has encountered resistance from the state logistics company, Transnet SOC Ltd.

This shift signifies a significant departure from one of the core principles of South Africa's ruling African National Congress, which traditionally championed state-led companies and investment as the driving force for economic growth. The current pivot towards increased private sector involvement reflects the growing reliance on private enterprises to address the deterioration of essential services. Private companies are now making inroads into sectors that were once exclusively under state control, such as power and water provision.

The need for immediate action to rectify the ailing logistics system in South Africa is pressing. Cargo volumes on the coal-rail line leading to the export terminal in Richards Bay have plummeted to their lowest levels since 1993. Iron-ore rail transport is at its weakest point in a decade, while general freight volumes have experienced an even steeper decline, as stated by the authors of the report. Furthermore, South Africa's container ports have been identified as the least efficient on the African continent.

In an effort to address the extensive damage caused by the collapse of South Africa's state-run ports and freight-rail sector, resulting in an estimated economic loss of at least $26.7 billion since 2010, the South African presidency has unveiled a comprehensive plan. This strategy aims to delegate the majority of the responsibility for rectifying these issues to the private sector.The blueprint, as detailed in a 124-page document titled Roadmap for the Freight Logistics System in South Africa, recently revealed and viewed by Bloomberg, outlines a series of timelines and measures. These measures encompass the establishment of an autonomous port and rail regulator, granting private firms access to rail lines, and offering rights to operate ports and rail routes to private entities. Interestingly, even the operation of critical coal and iron-ore rail export lines, which have been underperforming and impacting exports for companies such as Anglo American Plc and Glencore Plc, may potentially be entrusted to private operators, as per the report's authors. This suggestion has encountered resistance from the state logistics company, Transnet SOC Ltd.This shift signifies a significant departure from one of the core principles of South Africa's ruling African National Congress, which traditionally championed state-led companies and investment as the driving force for economic growth. The current pivot towards increased private sector involvement reflects the growing reliance on private enterprises to address the deterioration of essential services. Private companies are now making inroads into sectors that were once exclusively under state control, such as power and water provision.The need for immediate action to rectify the ailing logistics system in South Africa is pressing. Cargo volumes on the coal-rail line leading to the export terminal in Richards Bay have plummeted to their lowest levels since 1993. Iron-ore rail transport is at its weakest point in a decade, while general freight volumes have experienced an even steeper decline, as stated by the authors of the report. Furthermore, South Africa's container ports have been identified as the least efficient on the African continent.